Chapter 105: A New Flavor (4)
TL: Hanguk
This year's Christmas, just like last year's, was spent with family, and then on December 30th, a one-ton refrigerated truck stood in front of Club NOVA in LA Downtown.
The truck was wrapped in a graphic showing a ripe pink peach along with the words "The One, Peach Light Soju," making it clear that it was a vehicle for some kind of event.
Inside the club, beneath the red lighting, the Black Eyed Peas' "Pump It" thumped from the DJ booth, and a large banner hung beside the stage.
[Free Sampling – The One, Peach Light Soju]
Rows of transparent bottles lined the tables; it was a "Holiday Tasting Night" event hosted by Unity Spirits. Young people are usually short on cash and begrudge even the money for getting into a club or buying drinks, but with a free drink on offer, no one hesitated.
"What's this?"
"Peach... soju? What's soju?"
"No idea. Says it's some Eastern liquor, but who cares. It's free."
The faces of the first people to take a sip changed in an instant.
"This is alcohol? It's just juice."
"But there's a little kick at the end... it hits you."
"Hey, this is pretty good. Give me another bottle."
A line formed in front of the table.
Young women laughed, glasses in hand, dragging their friends over.
"Just take one sip. It's so good."
"This is really alcohol?"
"It's 13 percent."
"Mm! This is so good! I'm gonna get wasted if I keep drinking it!"
The clubbers enjoying the music gradually swarmed toward the event table for the peach-scented liquor, and it quickly became a madhouse. And Malcolm Lee of Unity Spirits stood off in a corner, glass in hand, watching it all.
Beside him, the club manager spoke as if in awe.
"How much is a bottle?"
"Haven't set it yet."
To be precise, it wasn't so much that he hadn't set it as that he couldn't. That was because Golden Grain Soju House had launched the promotional event before settling on a supply price for the fruit soju.
Fruit soju was different from vodka. Because Absolut, the vodka that already dominated the American market, had established a fixed market price, "The One" couldn't raise its price even if it wanted to. Raise the price, and it would lose out to competing vodkas from other companies.
But fruit soju was different. Since there was no other fruit soju established in the market, charging a high price didn't much matter.
The reason the price hadn't been set yet was that the question of whether they really needed to sell it cheap was still unresolved.
"I want to put it on our bar menu. I've never seen a reaction like this. If I order now, when does it arrive?"
Malcolm burst out laughing. No matter how good a liquor he'd ever brought, he'd never seen a reaction this desperate. It wasn't even a famous brand, just an Eastern drink the manager was laying eyes on for the first time, and yet here he was begging, a near-manic gleam in his eyes.
"Hmm... maybe next weekend?"
"Isn't that too late?"
"The factory that makes this liquor is small."
"Where the hell is it?"
"It's a distillery in Sacramento. The owner originally ran a rice farm. Then rice got so cheap it stopped making financial sense, so he set up a distillery. What he made there is 'The One', which we've been carrying since last year."
By now "The One," the Korean-style vodka with its distinctive, subtle grain aroma, had become quite famous among young people. Naturally the club manager knew it well; there was certainly demand for it, but even so it didn't have anything like the explosive power this fruit soju had now.
"I figured it was the same company because of the name, but it's a really small operation, huh? Okay, but don't keep me waiting too long. The friends who like a drink don't have good memories."
He meant that if it launched too late, today's promotional event wouldn't mean much, and Malcolm smirked and nodded.
"I know, I know."
But Malcolm knew the club manager's pushy line was a lie. Even the friends who liked their drugs wouldn't forget a fruit soju like this one so easily.
He was certain that after today's event, the friends who'd come to the club would go to school and spread the word about the fruit soju.
"So get it to me as fast as you can. As long as you bring it, I'll stock as much as I can. Fifty... no. I'll stock a hundred cases."
At the words "a hundred cases," even Malcolm's eyes went wide as he looked at the club manager.
"A hundred cases?"
"Yeah, a hundred cases. Don't tell me the distribution price is, like, three hundred dollars a case (twelve bottles)?"
"No... of course not."
"It's just my hope, but I think anything over twenty-five dollars a bottle is a stretch. You know the priciest liquor right now runs about twenty dollars?"
"I know."
"Don't sell it too expensive. I want to move as much as I can."
"I'll bring that up with the supplier in our meeting."
Malcolm nodded and, watching the people keep crowding the event table, smiled with satisfaction.
The event was a success. The fifty cases they'd prepared sold out fast, and people shouted that they'd pay good money, just sell them the liquor. The women especially, after tasting the fruit soju, turned up their noses at the usual harsh drinks and kept asking when it would launch.
Having wrapped up the promotional event that way, Malcolm visited Golden Grain Soju House in Sacramento the very next day.
Arriving at the distillery with the contract he'd drawn up, his heart sank at the sight of a vehicle pulling away from the place. He was sure a competing distribution company had negotiated ahead of him and was on its way out.
"Welcome. Have a seat."
The peach scent lying thick in the distillery air hardened his resolve all the more.
In the small, cramped office attached to the distillery, Malcolm sat down, and across from him sat the two co-founders.
"I heard you held a promotional event in LA. How was it?"
To Jacob's question, his eyes sparkling, Malcolm laid on the easygoing, good-humored patter that came so naturally to him.
"It was perfect. How should I put it, everyone in the club fell for this liquor. It reminded me of the chicken my mother used to make when I was a kid. Just like I can't stop thinking about that crispy, juicy chicken, this fruit soju is going to become a drink young people can't live without."
"Hmm..."
Satisfied with Malcolm's answer, Jacob met my eyes. The way they sparkled with hope, it was as if success were already right in front of us.
"When I heard the contract terms before, honestly, I felt they were a little lacking. Something about them..."
Seeing my unimpressed expression, Malcolm hurriedly said,
"That was just a kind of example. I wasn't actually proposing we go with that contract. As I said before, the plan was to run the promotional event, gauge the reaction, and then present proper terms."
That wasn't true. At the time he'd liked the fruit soju and had in fact put terms on the table, only to back off for the moment in the face of our negative reaction.
The promotional event had to be held regardless of which distributor we chose, since promotion was necessary anyway, so we'd simply had the distributor handle it.
"Is that so?"
"We've already become one team through 'The One'. One team. If only we at Unity Spirits look to profit, our team can't last. Both Unity Spirits and Golden Grain Soju House have to make the maximum profit."
"Oh ho..."
"Listen carefully. Jacob? Brian? We can offer Golden Grain Soju House a perfect partnership. No other company out there could provide service at this level."
Before he'd even brought out the terms, he widened his already large eyes still further, ratcheting up the anticipation.
"What kind of service are you considering?"
When Jacob asked, Malcolm drew the prepared contract from his briefcase.
"First, Unity Spirits takes the exclusive distribution rights not just for the West but the Midwest as well. In exchange, we bear a hundred thousand dollars in advertising and promotion budget. That includes magazine ads in the likes of Food & Wine, LA Weekly, and SF Chronicle. From there, if sales exceed two million dollars, we'll bear up to two hundred thousand in advertising and promotion; and if they exceed five million, we'll cover the entire advertising and promotion budget, whatever it comes to.
On top of that, in the first year we'll allocate two hundred fifty thousand dollars for TV and radio advertising. We put up two hundred fifty thousand right from the start. Impressive, isn't it?"
"......"
A slightly startled Jacob looked at me... but I didn't budge, keeping my eyes on Malcolm. At that, Malcolm pressed on as if he were nowhere near finished.
"And that's not all. Unity Spirits will provide a separate hundred and fifty thousand dollars over the year for tasting-event budgets at fifty clubs. And this promotional investment still isn't the end of it.
Second, we cover the full logistics cost. From LA to Sacramento, Portland, Chicago... we handle all the transport. Well, you'll think that's only natural. But the third one will surprise you.
Third, once bottling output grows, we can even outsource the bottling line to a Unity-affiliated factory. To prepare for when the volume gets big. How about it? This, right here, is Unity Spirits."
"......"
"I don't know how the other companies pitched to you, but there's probably nowhere that'll back you the way we will."
We hadn't bothered to look into other companies, but even if we had, I doubted any of them would have promised to spend advertising money on that scale.
Magazine ads, TV, radio, plus club promotion: an advertising investment reaching half a million dollars all at once was a considerable sum, equal to half of "The One's" annual profit.
"Sounds good."
At my reply, Malcolm finally grinned and rubbed his hands together.
"Because we're one team. So, what kind of wholesale price are you thinking?"
"Let's make it ten dollars."
At the words "ten dollars," Malcolm flinched.
"Ten dollars? Ah... couldn't you bring it down just a little more? Even 'The One', the vodka, was eleven dollars."
His point was that if even the vodka was eleven dollars, ten for fruit soju was too steep.
And there was logic to it. "The One," being vodka, was a pure distilled product, so the making was simple, but the energy, time, and ethanol loss were large, which kept the margin low relative to cost. Fruit soju, on the other hand, used an already-distilled base (the raw vodka spirit) diluted down, so there was no added production cost; instead flavoring and syrup ingredients were added on, but even so the cost stayed relatively low, around four to four and a half dollars.
On top of that, production was three to four times faster and short-term inventory turnover was high, so by that logic alone the retail price should have come down further; raising it instead was exactly what threw Malcolm.
"I think the target customer base is different, and the loyalty is different too. So I think it's fine to set the price higher."
"Sure, but purely in terms of factory operating efficiency, isn't fruit soju far more profitable? Let's think long term here. At ten dollars it's hard to run events, too. To sell to retailers at, say, $15.90 or $16.90, ten dollars just doesn't work."
"Then how much do you want?"
He hesitated a moment, then said,
"Let's make it eight-fifty."
"Hmm..."
"If you do that for us, we'll run the promotions with real efficiency. 'The One Peach Light Soju' will be lined up all across the marts and clubs of the West and the Midwest."
Jacob and I looked at each other, then nodded. Jacob grinned, stood up at once, and held out his hand to him.
"Let's make this work."
"An excellent choice. This is how the team keeps going."
Malcolm shook my hand too, then asked,
"Right now it's Peach Light Soju, but you're preparing other flavors as well, aren't you?"
"Of course. Lemon, cherry, grape, pineapple... we're thinking of them all."
"Oh, lemon, cherry, pineapple, I'm curious about every one of them. But for that, the distillery's facilities will need to be a bit more..."
Jacob, who had already taken all of his concerns into account, said,
"As it happens, we're planning to expand the facilities step by step."
"That's a relief. You'll need to scale up to at least double the current size. And even then, there's a good chance you won't be able to keep up with demand. If I were you, I'd take out every loan I could get and expand the facilities first. Twenty-four hours a day is about to feel too short."
After scaring Jacob thoroughly like that and drawing up the contract, he left the distillery.
Jacob, who had already reached a degree of understanding with me about the expansion, called in an expert for the distillery upgrade and, at the same time, launched full-scale Light Soju production.
And in 2007, just as Malcolm had prophesied, Golden Grain Soju House began to catch fire.
*****
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